The bill has fuelled anger in the governing Syriza party and led to a revolt by its members against the prime minister, who has insisted the deal forged after a marathon weekend eurozone summit was the best he could do to prevent Greece from catastrophically crashing out of Europe’s joint currency.

The bill, which imposes sweeping tax increases and spending cuts, was approved by 229 votes to 64 with six abstentions – and with the support of three pro-European opposition parties.

The European Central Bank’s governing council, meeting in Frankfurt, was expected to ease its funding squeeze on shuttered Greek banks, the first step towards permitting them to reopen after nearly three weeks’ closure while cash rationing and other capital restrictions will remain in place.

European finance ministers were to hold a conference call on Thursday morning to agree on a plan for €7bn in bridging funds to enable Greece to meet its immediate debt service needs and avoid defaulting on the ECB next Monday.

All 28 EU countries are expected to contribute, despite the reluctance of non-euro members such as Britain and the Czech Republic, after a compromise was found to use euro zone funds to guarantee their ring-fenced contributions.

German Finance Minister Wolfgang Schaeuble, one of the toughest critics of Greece in the euro zone, said on German radio he still believed Athens would do better to leave the currency area temporarily to receive a debt writedown.

But Schaeuble said he would vote in favour of opening talks on a third bailout loan for Greece “with full conviction” when the German Bundestag debates the plan on Friday.
“We are a step further,” Schaeuble told Deutschlandfunk radio after the Greek parliament voted to approve the entire package demanded by European partners. “This is an important step.”

He said it would be hard to make Greece’s debts sustainable without a “haircut” or writedown on the principal by European lenders, which Berlin says would be illegal under EU treaties – despite an IMF report stating that Greece needs a debt deal.
Again, Christine Lagarde, the director of the International Monetary Fund, has hinted at a possible restructuring of Greece’s debt.
Speaking to CNN she said: “I have some hope because I understand as late as a couple of hours ago there were some more positive noises to that principle of debt restructuring.

“One way has to be found in order to release that burden and allow that country to demonstrate, yes, it can be back on a sustainable path.”

Prominent Syriza party members were among the 38 dissenters during the bailout vote, including energy minister Panagiotis Lafazanis and former finance minister Yanis Varoufakis, who many blame for exacerbating tensions with Greece’s creditors with his abrasive style during five months of tortured negotiations.

The vote came after an anti-austerity demonstration by about 12,000 protesters outside parliament degenerated into violence as the debate was getting under way last night. Riot police battled youths who hurled petrol bombs for about an hour before the clashes died down.

The bill was the first step Greece must take in order to begin negotiations with creditors on a new bailout – its third in five years – of about €85bn) in loans over three years.

Dissenters argued that Greeks could not face any further cuts after six years of recession that saw poverty and unemployment skyrocket and wiped out a quarter of the country’s economy.

Mr Tsipras has been battling all week to persuade party hardliners to back the deal. He has acknowledged the agreement reached with creditors was far from what he wanted and trampled on his pre-election promises of repealing austerity, but insisted the alternative would have been far worse for the country.

“We had a very specific choice: A deal we largely disagreed with, or a chaotic default,” he told parliament before the vote.

Mr Tsipras had urged Syriza members to back the bill despite having urged voters to reject earlier, milder creditor demands in a July 5 referendum. Greeks voted overwhelmingly to reject those proposals.

Finance minister Euclid Tsakalotos, who took over from Mr Varoufakis the day after the referendum, said the deal Greece reached with its creditors on Monday was the only possible choice.

“I must tell you, that Monday morning at 9.30, it was the most difficult day of my life. It was a decision that will weigh on me for the rest of my life,” he said.
“I don’t know if we did the right thing. But I know we did something with the sense that we had no choice. Nothing was certain and nothing is,” he told parliament.

High-ranking dissenters included alternate finance minister Nadia Valavani, who resigned from her post yesterday, saying she could not vote in favour of the bill.

In a letter sent to Mr Tsipras she said she believed “dominant circles in Germany” were intent on “the full humiliation of the government and the country”.
The economy ministry’s secretary general Manos Manousakis also resigned over the measures.

Parliament speaker Zoe Konstantopoulou, a prominent Syriza member, slammed the deal as a product of blackmail, calling it a “crime against humanity” and “social genocide”.
The vote came after more than two weeks of capital controls, with Greek banks and the stock exchange shut since June 29 and ATM cash withdrawals limited to €60 a day.

With its banks dangerously low on liquidity and the state practically out of cash, Greece desperately needs funds. It faces a Monday deadline to repay €4.2bn to the European Central Bank, and is also in arrears on €2bn to the International Monetary Fund.

Negotiations on the new bailout will take an estimated four weeks, leaving European finance ministers scrambling to find ways to get Athens some money sooner.

The European Commission has proposed giving Greece €7bn in loans from a special fund overseen by all 28 European Union nations so it can meet its upcoming debts. The loan would be made pending the start of a full bailout programme, but faces resistance from Britain, a non-eurozone member.

Germany argued that one way for Greece to meet its financing obligations was for it to issue IOUs for domestic needs.